UK to beef up City watchdog powers over crypto-assets

Bitcoin

The UK’s finance ministry has proposed giving the City’s watchdog new powers to regulate crypto assets like bitcoin, and also outlined a crackdown on misleading sales literature bombarding consumers over the internet.

KEY POINTS:

  • British government to propose giving the City of London’s watchdog new powers to regulate bitcoin and other cryptocurrencies
  • As a nation reliant upon the financial services sector, the British government has been investigating ways to involve itself in cryptocurrencies

Currently any firm authorised by the Financial Conduct Authority can approve any financial promotion from an unauthorised firm, but the system is not working properly, the ministry said.

The ministry is proposing a “regulatory gateway” to pre-vet an authorised firm that wants to give the nod to marketing material from an unauthorised financial services firm.

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“Any firm wishing to approve the financial promotions of unauthorised firms would first need to obtain the consent of the FCA,” the ministry said in a statement.

The government of the United Kingdom also proposes to extend the FCA’s “perimeter” to bring the promotion of some types of crypto-assets under its wing for the first time.

“It is the government’s assessment that many of these unregulated crypto-assets expose consumers to unacceptable levels of risk,” the finance ministry’s consultation paper said.

“The cryptoasset proposals are not surprising and deal another nail in to the coffin of illegitimate ICOs (initial coin offerings), which have lost their shine since the heydays of 2018,” said Bradley Rice, senior associate at the law firm Ashurst.

Huge amounts of consumer money now flow into cryptocurrencies, often advertised on social media and almost entirely out of the reach of the FCA, said Matt Hopkins, head of FinTech at accountants BDO.

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“Regulation will make it much more difficult for crypto businesses to access investors who may not understand the risks they are taking,” Hopkins said.

Via our content partners at Reuters. Reporting by Huw Jones. Editing by Catherine Evans,

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